Couple wants to replicate gift-basket success

MARKETINGCouple wants to replicate Internet gift-basket success with corporate HoustonAiming to click in their own backyard

SANDRA BRETTING, For The Chronicle

Published 6:30 am, Sunday, November 18, 2007

MOST companies want to grow their Internet business, but for one local firm, the opposite holds true.

Design It Yourself Gifts & Baskets, the brainchild of Danelle Sherwood and her husband, Chip, already averages
1 million hits to its Web site during December, the company's busiest month.

The Sherwoods would like to see the company grow in another direction, primarily to Houston corporate clients.

Made to order

"Every one of our baskets is made to order,"
Chip Sherwood
, 47, said. "But with companies, once you make that first individual basket, you can turn around and make 200 to 300 more, so there's standardization. We're the first company listed on many of the search engines, but we realized we don't have much of a presence in our own backyard."

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According to Sherwood, individuals make up 80 percent of the company's orders now, and corporate clients the remainder, a percentage he'd like to flip.

"We're using a marketing company for the first time, and sending out catalogs," he said. "Of course, not everything you try is going to work. But we're learning by trial and error. You just hope you don't make mistakes that you can't bounce back from."

Frustration as motivation

Danelle Sherwood, 39, began the Web company in 2002, after trying to buy Christmas gift baskets online for family and friends.

"I was annoyed by the choices, because every site had the same baskets. Nothing was unique," she said.

The former financial planner for Ernst & Young turned to her husband for help in launching a Web site where viewers could design their own baskets from the Sherwoods' in-house inventory.

Chip Sherwood, an information technology specialist, built the site over three months and continues to update it to this day.

"I can tell you how many people are shopping on our site, what the average expenditure is, all of that," Chip Sherwood said. "Optimizing the search engines has been a big part of what I do, to make sure we're listed on the first page of engines like Google and Yahoo."

He said that requires producing quality Web content and having links from reputable companies that are relevant to the company's product. The best part for the Sherwoods is having an in-house IT professional in the family.

"We'd probably spend between $10,000 and $20,000 a year if we had to take this to the outside," Danelle Sherwood said. "That's how we started, with an online focus, but now we'd like to branch out from that."

Swelling holiday staff

While Design It Yourself Gifts & Baskets posted revenue of $110,000 in 2003, its first full year of operation, the Sherwoods expect the company to post $1.5 million in revenue this year. The company's profit margin ranges between 18 and 20 percent, Chip Sherwood said.

The company has three full-time employees, in addition to the Sherwoods, but will add between 30 and 40 temporary workers during the Christmas season. The months of November through January see a spike in business from 20 to 30 baskets per day to upwards of 1,000 baskets per day.

Maintaining a home office in addition to the company's headquarters in an industrial park near Hobby Airport has helped the couple work together, Danelle Sherwood said.

"It's healthy for our relationship to not be together all of the time," she said. "This way he can work out of our home office, and I can be here doing what I need to do."

Biggest expense: inventory

The company's biggest expenses, in order, are inventory, salaries, shipping costs and marketing, Chip Sherwood said. The company maintains about $400,000 worth of inventory, including food items, teddy bears and other baby products, Christmas gifts and hand-painted baskets.

"Our markup isn't as high as a lot of companies, because our products are more expensive to begin with, but we'd rather have a lower profit margin and produce baskets that people are excited about," he said. "A lot of gift companies give you sample sizes, but we include the full-size products, and we test all of the products before we offer them to our customers."